Wealth management webinar

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Global HNWI population grew 6.7% - 2nd lowest in 5 years

HNWI Population by Region (mn), 2009–2014

Source: Capgemini Financial Services Analysis, 2015

% Change 2013–2014

(2.1%) 7.7%

8.5% 3.02 3.31 3.37 3.68 4.32 4.69

3.12 3.39 3.35 3.73 4.33

4.68 2.95

3.13 3.17 3.41

3.83 3.99

0.40 0.44 0.45

0.49

0.57 0.61

0.45 0.48 0.50

0.52

0.54 0.53

0.11 0.12 0.12

0.14

0.14 0.15

0

4

8

12

16

2009 2010 2011 2012 2013 2014

# H

NW

Is (M

illion

s)

Total 10.0 Europe

North America

Asia-Pacific

Latin America Middle East

Africa

8.3%

4.0%

5.2%

Total 10.9 Total 11.0 Total 12.0

Total 13.7 Total 14.6 Global 6.7%

Europe lagged global HNWI growth.


Despite slower growth rates, Europe is still home to 10 of the Top 25 countries by HNWI population

HNWI Population by Country (k) , 2013–2014


4,00

6

2,32

7

1,13

0

758

527

472

330

320

219

203

156

173

176

161

151

172

160

125

124

120

130

112

108

109

105

4,35

1

2,45

2

1,14

1

890

550

494

343

331

226

219

198

190

189

178

161

161

155

141

138

127

125

125

114

111

107

0

900

1,800

2,700

3,600

4,500

5,400

Uni

ted

Stat

es

Japa

n

Ger

man

y

Chi

na

Uni

ted

King

dom

Fran

ce

Switz

erla

nd

Can

ada

Aust

ralia

Italy

Indi

a

Net

herla

nds

Sout

h Ko

rea

Spai

n

Saud

i Ara

bia

Braz

il

Rus

sia

Kuw

ait

Hon

g Ko

ng

Nor

way

Mex

ico

Taiw

an

Aust

ria

Arge

ntin

a

Sing

apor

e

Num

ber o

f HN

WIs

(k)

2013 2014

9% Annual Growth (%) 2013–2014

5% 4% 4% 4% 8% 26% 10% 7% 10% 7% (6%) (3%) 12% 11% 6% (4%) 12% 6% 2% 2%

Rank in 2013

1 6 7 8 9 10 16 12 11 14 17 13 15 20 21 18 22 24 23 25 19

5% 1% 17% 4%

2 3 4 5


Constrained by economic uncertainties, HNWI population and wealth of European markets witnessed below average growth

Note: Size of the bubble represents HNWI wealth in 2014 Source: Capgemini Financial Services Analysis, 2016

Norway was an outlier in Europe with significant growth, while UK, Netherlands, Switzerland, Russia witnessed average growth.

HNWI Population and Wealth CAGRs for Top 25 Markets, 2008–2014

Fastest-growing cluster

Moderate-growth cluster

Below-average growth cluster

Brazil

Italy

Mexico

France

Germany Argentina

Spain

U.S.

Saudi Arabia U.K.

Netherlands

Canada Russia Australia South Korea

Japan Switzerland

Austria

0%

16%

4%

8%

12%

20%

0% 5% 10% 15% 20%

HNWI Wealth 2008-14 CAGR

HN

WI P

opul

atio

n 20

08–1

4 C

AGR

Glo

bal A

vera

ge

(9.5

%)

Global Average

(9.3%)

= US$1Trillion

Sample bubble

China

India

Kuwait

Taiwan

Norway

Hong Kong

Singapore

25.5% Wealth 24.4% Pop


Varied HNWI Preferences on Their Wealth Management Relationship


HNWIs across the globe are currently fairly satisfied with their wealth managers

HNWI Satisfaction with Wealth Manager

Source: Capgemini and RBC Wealth Management Global HNW Insights Survey, 2015


However younger HNWIs display low trust and satisfaction and a varied approach to wealth management

Lower Trust and Satisfaction

Different Approach to Relationships

A Preference for Referrals and

Advice

73.4%

70.0% Younger

Older

… Lower Satisfaction with their Wealth Manager

… Lower Trust and Confidence in Wealth Manager

… Lower Trust and Confidence in Firms

58.3%

54.3% Younger

Older 58.1%

53.5% Younger

Older

… Relationships with Five or More Firms

… Lower Percentage of Assets Managed by Primary Wealth Manager

14.7%

43.2% Younger

Older 58.6%

51.1% Younger

Older

39.7%

58.4% Younger

Older

… Higher Rate of Introduction to Wealth Manager Through Referrals

… A Preference for Seeking Professional Advice

… An Orientation to the Firm as the Primary Relationship

49.5%

53.6% Younger

Older

73.6%

80.1% Younger

Older

Younger HNWIs Have… … As Demonstrated By…


As a consequence, wealth managers less aligned with younger HNWIs


HNWI and Wealth Manager Perspective on Understanding of HNWI Wealth Needs by the Wealth Manager


Increasing Demand for Digital Leading to Disruption in Wealth Management Industry


Five fundamental forces are driving the customer demand for digital across industries

“Amazon-ification”

“Google-ification”

Google has driven the information age through an individual’s ability to find a wide variety of information quickly, easily, and for free

“Apple-ification”

Apple established the customer experience at being at the center of a firm’s strategy

One of the first firms to articulate and deliver a contextual and sales-focused digital value proposition

Drove widespread adoption of digital social interaction More relevant to describe this as “

Contextual and sales-focused”

Customers Dealing with Digital in their Everyday Lives


Information Age

Customer Experience

Sales-focused Digital Value Proposition

Digital Social Interaction

“Facebook-ification”

Through process simplification and improvement, Uber transformed the meaning of customer experience and convenience

Process Simplification and Convenience

“Uber-ification”


As expected, wealth management customers also have a high demand for digital, led by younger HNWIs

HNWIs Considering Entire or Most of Current WM Relationship to be Digital Currently and Five Years in Future, by Age, Q1 2014

Note: Questions asked, “To what extent would you say that your wealth management relationship is CURRENTLY conducted through digital channels?”, “In FIVE YEARS, to what extent would you like your wealth management relationship to be conducted through digital channels?”, and “Thinking about your wider retail experience, to what extent do you CURRENTLY buy personal items, such as clothes or books, through digital channels?”

Source: Capgemini Financial Services Analysis, 2016; Capgemini and RBC Wealth Management World Wealth Report 2015

57%

77%

59%

48% 40%

64%

83%

70%

54% 48%

0%

25%

50%

75%

100%

Global Under 40 Age 40-49 Age 50-59 Age 60+

Future Current


The largest age gaps are on emerging digital channels of mobile, social media, and video

Under 40

40+

HNWI Channel Importance for Different Wealth Management Capability Areas

Note: Weighted average of respondents indicating importance level to difference capabilities per channel Source: Capgemini Analysis, 2014; Global HNW Insights Survey 2014, Capgemini, RBC Wealth Management, Scorpio Partnership

In-Person/ Phone

Internet E-mail Mobile Social Media

Video In-Person/ Phone


Video

In-Person/ Phone


Video

INFORM ENGAGE

TRANSACT


Younger HNWIs and those from emerging markets more likely to leave if firms don’t deliver integrated experience

63%

70%

68%

65%

0% 20% 40% 60% 80%

$20m+

$10m–$20m

$5m–$10m

$1m–$5m

56%

63%

63%

76%

83%

87%

65%

0% 20% 40% 60% 80% 100%

North America

Europe

Japan

Middle East and Africa

Asia-Pacific (excl. Japan)

Latin America

Global

49%

60%

68%

80%

0% 20% 40% 60% 80% 100%

Age 60+

Age 50–59

Age 40–49

Under 40

HNWI Propensity to Leave Wealth Management Firm Due to Lack of Integrated Channel Experience (% of Respondents)

Source: Capgemini, RBC Wealth Management, and Scorpio Partnership Global HNW Insights Survey 2014


As a result, HNWIs also showcase a lot of demand in the automated advisory area

However, wealth managers seem to be underestimating the demand.

Note: Questions asked: “Would you ever consider having a portion of your wealth managed by an automated advisory service”? “In your view, would your HNW clients consider having a portion of their wealth managed by automated advisors”?

Source: Capgemini Financial Services Analysis, 2016; Capgemini and RBC Wealth Management, World Wealth Report 2015

49%

76%

46% 52%

70%

33%

20% 19% 16%

32%

14% 18%

0%

20%

40%

60%

80%

Glo

bal

Asi

a-P

acifi

c(e

xcl.

Japa

n)

Eur

ope

Japa

n

Latin

Am

eric

a

Nor

th A

mer

ica

Per

cent

age

of R

espo

nden

ts

HNWI Wealth Manager

HNWI and Wealth Manager Assessment of HNWI Propensity to Use Automated Advisory Services, Q1 2015


Younger HNWIs are further propelling the rise of automated advice

Note: Questions asked: “Would you ever consider having a portion of your wealth managed by an automated advisory service”?; “How much of your portfolio would you consider transferring to an automated advisor”?


HNWI Willingness to Use Automated Advisory Services and to Transfer Proportion of their Wealth to Automated Advisory Services, by Age, Q1 2015

Proportion of Wealth HNWIs are Willing to Transfer to Automated Advisory Services

Willingness to Use Automated Advisory Services

30.3%

38.6%

54.7%

71.3% 70.9%

0%

25%

50%

75%

60 andAbove

50–59 40–49 30–39 Under 30

Res

pond

ents

53.2%

60.4%

49.3%

41.4%

29.8%

46.8%

39.6%

50.7%

58.6%

70.2%

0% 25% 50% 75% 100%

60 and Above

50–59

40–49

30–39

Under 30

Respondents

Below 50% At least 50%


However, current progress of automated advisors might just be reflecting the tip of the iceberg in terms of disruption

Source: Capgemini Financial Services Analysis, 2015; http://www.investopedia.com/terms/i/industrylifecycle.asp

Automated Advisor Life Cycle in Wealth Management Industry

Pre-Birth Birth Innovation Growth Maturity Decline

Sca

le /

Mar

ket S

hare

Current Stage of Automated

Advisory Services

Marketing

Wealth management webinar